Calling a Piece of Junk Mail

mortgage spam emailI just published about junk mail that I received on my blog… but it doesn’t even compare to the piece of garbage we received in the mail today.  In fact, it was so bad, that I decided to call them to learn more about their services.

The mailer looks very official. It states “important legal information inside – please open immediately”.  No where on this POS does it disclose who this is from.  Not on the upper left corner of the envelope and nor in the actual body.

It does reference our mortgage company who originated the mortgage (Mortgage Master Service Corporation) and in the tiniest of small print at the bottom, discloses they’re not related to the mortgage company.

It goes on to say that the letter is from the “Loss Mitigation Administration Office” and that we receiving the notice because we may be eligible for “special modification program guidelines in conjunction with the New 2012 Home Modification Program… HAMP2 is an aggressive update to Obama’s original program. This new program may enable you to modify your existing home loan and reduce your monthly mortgage payments, receive interest rate reductions…without the traditional restrictions of credit history, income or employment status, equity and reserves…”

It goes on to offer a 2% fixed interest rate and says our information is “on file”… and if we don’t respond by July 13, 2012, we may not get this swell deal because “only a limited number of people can qualify”.


So… I decided to call the toll free number after googling it, did not reveal who was sending us this great offer.

The gentleman on the phone had a very pleasant, soothing voice.  He answers the phone “Loss Mitigation Department, can I help you?”

Me: Yes, I’d like to know who sent a mailer to my home regarding HAMP?

Him: [He reveals it’s a law firm – I’m not going to promote them here].

Me: Why did I receive this? I’m not behind on my mortgage? Don’t you need to not qualify for a regular refi or HARP to have a HAMP loan modification?”

Him: Our company has done searches to determine who may be at risk for a loan mod, perhaps you’re underwater? Lets say you have a $350,000 mortgage but your home is only worth $250,000.

Me: My home is not underwater and we’re not behind on our payments. I’m confused how I could qualify for a HAMP or why I would want one.

Him: Well you might want to consider a HAMP over a refinance because refi’s are so costly. Most have a 1% origination fee and 3.5% loan cost.

At this point, it’s hard for me to not totally blast him.  He’s so far from the truth…

Me: what are your fees?

Him: I really can’t say.  There’s a range depending on what you need.  Who is this?

Me: You can quote costs for refi’s but you can’t give me a range for you charge?

Him: We have a flat fee of $3700 on many of our transactions. Clients are grateful for the service we provide. We can often do better than what a home owner might when dealing with their mortgage servicer directly.

Me: How are you coming up with the fees  you’re comparing for a refi?

Him: You’re sounding like a “professional”, can I help you with a loan mod?

Me: No. You cannot. I am a mortgage originator you the fees you’re telling consumers for a refinance are way off base.

Him: Do you call on every piece of junk mail that you receive?

Me: I see we agree on something – this IS a total piece of junk mail and no, this is a first. It was so disgusting, I had to call to see who sent this to me.

If I were considering a loan mod, I would NOT select assistance by some scammy piece of junk mail. It sickens me when I think of folks who truly need help and might fall hard for something like this.

Why can’t they be upfront and disclose they’re an attorney’s firm and for $X, they’ll try to get you a loan mod.?

I’ll be sending this piece of solicitation to DFI for review.

Here’s information from DFI’s site regarding Loan Modifications and signs to watch out for.

Tightening Lending Standards: A market conundrum

What will lending standards look like 6 mos. or a year from now? Will lenders with more stringent qualifying standards be a drag on the market? At minimum, it will change the complexion of the pool of buyers. Some ramifications of tighter standards that come to mind:

  • reduces ability of consumers with credit blemishes to purchase a home as easily as before.
  • it may take longer for loans to be pushed through, because
  • borrowers may have to provide more verifiable documentation.
  • lenders may look more carefully at appraisals and implement other safeguards to reduce fraud.
  • reducing the probablity of those buying a home with questionable credit from getting into financial trouble (which leads to distressed properties which leads to downward pressure of prices)
  • a more stable and credit seasoned pool of borrowers, leads to stable and healthy markets.
  • housing affordability becomes much more tied to economic fundamentals vs speculation and artificial housing appreciation.

Over the last three years or so, qualifying for a mortage has been absurdly easy. There is no doubt about it. When my wife and I bought our first house (670 sq ft) in Ballard, I barely qualified for an FHA ARM. I think the underwriters were cringing and looking away when they stamped it “approved.” We had to provide bank statements, two yrs. of tax returns and more.

Today, borrowers with average to low credit scores could get a loan with virtually little oversight. What program buyers qualified for largely depended upon borrowers credit scores. In the end, it really came down to the interest rate you were going to pay. It was never a matter of “if” you could get a loan, rather, it came down to the interest rate and program you were placed in.

A conundrum

In hindsight, most first time homebuyers that closed their purchase transactions though our escrow office put little to nothing down over the last three years. It is still going on today, but not nearly at the tempo that our office experienced in all of 2005 through summer of 2006. First time home buyers drive the market, providing impetus for sellers to move up into a home that suits their current lifestyle. For many, that meant moving to new construction housing. If the first time buyer market slows, everything down stream slows as well.

Through my direct discussion with loan officers, some have indicated that lenders are scrutinizing transactions more carefully. One indicated that a recent appraisal was required to add more comparable homes and provide interior photos of the subject property being purchased.

WMC, a large national lender and a wholly owned subsidiary of GE Finance (my spouse has now informed me that WMC is no longer, but is now taking the GE name) is slated to eliminate all 100% financing with borrowers having FICO scores below 700. Further, they are financing first time home buyers (FTHB’s) at a 95% cap. I take this to mean that FTHB’s will need a 5% down payment. This is quite the turnaround from the loose lending standards we have seen.

If lending standards tighten with or without government intervention, certainly it will have an impact on the ability of buyers with marginal credit to become a homeowner. Those with existing mortgages may find it more difficult to refinance. I can’t help but think of all the 100% financed borrower transactions our office has closed—borrowers that may not have qualified (nor closed) if these guidelines were in place today. In 2005, that meant 71% of our purchase/sale business would have never existed as it did (hard swallow).

Generally, with sales trending slower than in months past, stricter qualifying standards may have enough impact to slow sales further. I hope it does not, but I don’t see the alternative as being realistic. The upside is that the pool of homebuyers may move towards more traditional mortgage products, such as fixed rates. More stringent qualifying standards is a good thing for the market long-term, even if the short-term prognosis is discomfort.